Allahabad High Court
Commissioner Of Income Tax vs Red Rose School on 7 February, 2007
Equivalent citations: (2007)212CTR(ALL)394
Author: Pradeep Kant
Bench: Pradeep Kant
JUDGMENT
1. This appeal under Section 260A of the IT Act, has been filed by the Revenue, challenging the order passed by the Tribunal, by means of which the Tribunal has allowed the appeal of the assessee, holding that the assessee has made out a case for registration and thereby setting aside the orders passed by the CIT, rejecting his application filed under Section 12AA of the Act.
2. The assessee society moved an application under Section 12AA of the Act, claiming registration saying that the assessee was running an institution solely for educational purposes and not for the purpose of profit and, therefore, was entitled for being registered.
The CIT called for a report from the concerned ITO, who stated that the assessee society was registered on 29th March, 1982, of which Smt. Shashi Mishra was the president and Sri R.C. Mishra, her husband, was Mantri/Manager of the society. The said society was running school at Rajajipuram, Lucknow and at Gomti Nagar, Lucknow. The third branch of the institution was under construction at Vishnulok Colony, Kanpur Road, Lucknow.
The ITO, however, found that the assessee society had been making investment in purchase of library books and noted that books worth Rs. 50,000 were purchased by the assessee from Orient Longman (P) Ltd. on 1st Dec, 2000 and again books were purchased for Rs. 50,100 vide bill dt. 31st July, 2000. The ITO was of the view that these books were for higher studies and not fit for the standard of school run by the assessee society. She further noted that on enquiry from Orient Longman (P) Ltd., the name of the assessee society was not having any account, but the books were purchased by Nav Jagriti Kendra and that assessee society had shown expenses on account of educational contribution to Nav Chetna Kendra which was running to several lakhs of rupees, whereas Nav Chetna Kendra was another society registered on 21st May, 1993, in which Sri R.C. Mishra was the secretary.
The next point which the ITO noted was that the assessee society was showing income from school fees and interest on FDRs but the assessee society could not give out the basis of charging fee under different heads and that the assessee could not give out bifurcation of the fees. Further the report of the ITO said that the assessee could not reconcile the difference in the balance sheet.
On the objects of the assessee society, the ITO reported that in the rules of the society, the president, its Mantri/Manager would remain on their post throughout life. However, on sudden demise of Smt. Shashi Mishra, Sri Prashant Mishra son of Sri R.C. Mishra was inducted and was made as Dy. manager of the society. The objects of the society also permitted managing of other emergent work, which give power to the president and manager of the society to go beyond the work of charitable nature.
On the aforesaid facts, the ITO concluded that totality of the facts go to reveal that assessee society was breaking the laws of the land and it cannot be said that assessee society was being run for charitable purposes.
The CIT also noted that counsel of the assessee was asked to give the details of salary payments and reconcile the same with employees provident fund payments but the enclosure of the order of the CIT reveals that huge amount of salaries were paid from financial year 1995-96 onwards to different employees, from which no provident fund amount was deducted, for which the CIT deputed the Inspector, who gathered necessary information from the provident fund authority. He thus came to the conclusion that non-deduction of provident fund is against public policy. The CIT, on consideration of the report of the ITO and also on his own assessment of the aforesaid facts, found that since the grant of registration under Section 12AA of the Act is a privilege and not a right and that the assessee society having not been able to prove on record that the activities of the assessee society were solely for educational purpose, rejected its claim for registration.
The CIT also relied upon the case of Sat Pal & Co. v. Lt. Governor of Delhi for the aforesaid proposition of law.
3. The Tribunal relying upon the scope of enquiry as propounded by its Bench at Lucknow in the case of St. Don Bosco Educational Society v. CIT (2004) 84 TTJ (Lucknow) 805 : (2004) 90 LTD 477 (Lucknow) held that considerations made by the CIT and report submitted by the ITO were, in fact, not sufficient to reject the plea of registration and that at the time of registration, the CIT was obliged only to see that (i) the objects of the society are not against public policy; and (ii) the activities of that society are genuine.
The Tribunal also held that it was the duty of the AO to examine the case of the assessee for exemption under Section 11/13 of the Act when assessee files necessary return in the relevant years and in case he finds that the assessee was indulging in such activities, which may debar it from getting exemption, he may pass necessary orders and that mere registration will not be sufficient to allow the assessee to claim exemption as that will be the domain of the AO to examine each and every fact including the defects noted by the CIT.
4. Section 12A of the Act under the heading 'Conditions as to registration of trusts etc' says that provisions of Section 11 and Section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:
(a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the CIT before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under Section 12AA:
Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of Sections 11 and 12 shall' apply in relation to the income of such trust or institution;...
5. Section 11 says that subject to the provisions of Sections 60 to 63, the following income, namely, given in sub-clauses of the aforesaid section, shall not be included in the total income of the previous year of the person in receipt of the income, whereas Section 12(1) says that 'any voluntary contributions received by a trust created wholly for charitable or religious purpose or by an institution established wholly for such purposes (not being contributions made with a specific direction that they shall form part of the corpus of the trust or institution) shall for the purposes of Section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes' and the provisions of that section and Section 13 shall apply accordingly.
Sub-clause (2) says that 'the value of any services, being medical or educational services, made available by any charitable or religious trust running a hospital or medical institution or an educational institution, to any person referred to in Clause (a) or Clause (b) or Clause (c) or Clause (cc) or Clause (d) of Sub-section (3) of Section 13, shall be deemed to be income of such trust or institution derived from property held under trust wholly for charitable or religious purpose during the previous year in which such services are so provided and shall be chargeable to income-tax notwithstanding the provisions of Sub-section (1) of Section 11.
6. Sub-section (3) of Section 13 provides as under:
(3) The persons referred to in Clause (c) of Sub-section (1) and Sub-section (2) are the following, namely:
(a) the author of the trust or the founder of the institution;
(b) any person who has made a substantial contribution to the trust or institution, that is to say, any person whose total contribution upto the end of the relevant previous year exceeds fifty thousand rupees;
(c) where such author, founder or person is an HUF, a member of the family;
(cc) any trustee of the trust or manager (by whatever name called) of the institution;
(d) any relative of any such author, founder, person, member, trustee or manager as aforesaid;
(e) any concern in which any of the persons referred to in cls. (a), (b), (c), (cc) and (d) has a substantial interest.
7. The aforesaid provisions, namely, Section 11 along with its sub-clauses as well as Section 12 along with its sub-sections, are the provisions, which provide that the income, as described therein, shall not be included in the total income of the previous years of the person in receipt of such income and that such a person would be entitled to the exclusion of such income from being computed with the total income under Section 11 as well as Section 12, as the case may be, whereas Section 13 deals with the cases where Section 11 shall not apply.
8. The aforesaid provisions thus, in essence, are the provisions, exempting the income covered by the specific heads under the aforesaid provisions of Sections 11 and 12, from being included in the total income of the previous year for the purpose of assessment and levy of tax. Unless the income, for which a person claims exemption or pleads that such an income should not be included in the total income of the previous year, in terms of provisions of Section 11, or a trust or an institution claims the exemptions, as given in Section 11 or Section 12, such a person would not be entitled to any such exemption. The AO on such a claim being put, has to determine as to whether the person or the trust, who is claiming benefit of the aforesaid provisions, is entitled for the same or not. For this purpose, the AO has the authority and the jurisdiction to make necessary enquiries and to satisfy himself about the genuineness of the claim of exclusion of a particular income from being taxed by not including it in the total income of the previous year of the assessee/person or the trust or the institution.
9. Mere registration under Section 12AA would not, in itself, be a ground, much less a conclusive proof, for excluding income from the total income of the person/assessee or trust from income of the previous year. But the provisions of Section 12A, which is under the heading 'Conditions as to registration of trusts etc. disentitles any trust or institution from claiming any benefit of the provisions of Section 11 and Section 12, in relation to its income, unless, the person in receipt of the income, has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the CIT before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under Section 12AA. Rest of the provisions of Section 12A, not being relevant for the present controversy, are not being referred to.
10. Section 12A thus, prescribed conditions for registration of trusts and obligates the trust or the institution to seek registration under Section 12AA, if such trust or institution intends to have the benefit of the provisions of Section 11 and Section 12 of the Act, which have been referred to above.
11. These provisions thus, make it clear that if the trust or the institution is not registered under Section 12AA, it would not be able to claim any exemption or exclusion of its income from the total income of the previous year, even if such income is, otherwise liable to be excluded under any of the clauses of Section 11 or Section 12 of the Act.
Thus, in a case where registration is refused, the trust or the institution would not be allowed to claim any such exemption or exclusion of its income from the total income of the previous year.
12. The procedure for registration has been given in Section 12AA, which reads as under:
12AA. Procedure for registration.-(1) The CIT, on receipt of an application for registration of a trust or institution made under Clause (a) of Section 12A, shall-
(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and
(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he-
(i) shall pass an order in writing registering the trust or institution;
(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant:
Provided that no order under Sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.
(1A) All applications, pending before the Chief CIT on which no order has been passed under Clause (b) of Sub-section (1) before the 1st day of June, 1999 shall stand transferred on that day to the CIT and the CIT may proceed with such applications under that sub-section from the stage at which they were on that day.
(2) Every order granting or refusing registration under Clause (b) of Sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under Clause (a) of Section 12A.
(3) Where a trust or an institution has been granted registration under Clause (b) of Sub-section (1) and subsequently the CIT is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:
Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.
Sub-clause (3), aforesaid, was inserted by the Finance Act No. 2 of 2004 w.e.f. 1st Oct., 2004.
13. The aforesaid provision confers power on the CIT while considering the application for registration of a trust or institution made under Clause (a) of Section 12A to call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution, and also to make such inquiries as he may deem necessary in this behalf and after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he shall pass an order in writing registering the trust or institution and if he is not satisfied, he would refuse the registration.
Sub-s. (3) inserted w.e.f. 1st Oct., 2004, gave power of cancellation of registration to the CIT, if subsequently he finds and is satisfied that activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution.
Power of cancellation of registration has been conferred with a view to ensure that if once a registration has been granted under Section 12AA, the trust or the institution may not take liberty of misusing the provision and consequently go haywire in furthering the object of the trust or its activities do not remain genuine any further.
14. The moot question which has been pressed from both the sides, as per their own interests, is regarding the scope of authority and the extent of investigation by the CIT for the purpose of satisfying about the genuineness of the activities of the trust or institution, for the purpose of grant of registration?
15. The Revenue has, in substance, pleaded that the CIT, while satisfying himself about the genuineness of the activities of the trust or institution, has got full power to make any such enquiries, which may reflect upon the genuineness of the activities of the trust or institution and for that purpose, the income derived by the trust or the institution, its expenditure and also other activities, in the matter of carrying out the objects of the trust, can be subjected to scrutiny before granting registration.
16. In response, the assessee submits that the CIT has to limit his enquiries only to the object of the society, to see that the objects are not against public policy and they are, in effect, the objects for charitable purposes and it cannot be disputed that education is one such charitable purpose and that genuineness of the activities would only relate to the income derived by the institution and not in what manner the same has been spent.
Elaborating the aforesaid argument, it has been submitted that since the provisions of Section 12A debars a trust or an institution from claiming any exemption under Section 11 or Section 12 and consequently the applicability of Section 13, in the absence of registration under Section 12AA, the CIT was only to see that whether the income of the trust/institution falls within any of the heads under the aforesaid provisions of Sections 11 and 12, and in case during the assessment proceedings, for any particular assessment year, the AO finds that either the income derived cannot be said to be income from educational activities or its expenditure cannot be attributed to any educational purpose, he would be at liberty to assess that income and levy tax but on the contrary, in the absence of registration, the assessee would be deprived of claiming such benefit, even though it is otherwise entitled for the same either in respect of the entire income or a part thereof. Submission further is that the grounds taken by the CIT in the instant case, do not constitute any valid reason for rejection of registration and, therefore, also the order of the Tribunal, cannot be interfered with nor any substantial question of law arises in the appeal so as to warrant any interference.
17. On a reading of provisions of Sub-clauses (a) and (b) of Section 12AA, it makes clear that the CIT has to satisfy himself about the genuineness of the activities of the trust or institution and also about the objects of the trust or the institution.
18. On being satisfied about the genuineness of the activities of the trust or the institution and also about its objects, the CIT would either grant the certificate or would reject the prayer. In order to satisfy himself about the genuineness of the activities of the trust or the institution, he can call for such documents or information from the trust or the institution, as he thinks necessary and he is also empowered to make such enquiries as he may deem necessary in this behalf.
19. The objects of the trust can be had from the bye-laws or the deed of trust, as the case may be and unless, of course, the objects of the trust apparently make out that they were not in consonance with the public policy or that they were not the objects of any charitable purpose, registration cannot be refused accordingly on this ground.
20. In regard to the genuineness of the activities of the trust or the institution, whose objects do not run contrary to public policy and are, in fact, related to charitable purposes, the CIT is again empowered to make enquiries as he thinks fit. In case the activities are not genuine and they are not being carried out in accordance with the objects of the trust/society or the institution, of course, the registration can again be refused. But on mere presumptions and on surmises that income derived by the trust or the institution is being misused or that there is some apprehension that the same would not be used in the proper manner and for the purposes relating to any charitable purpose, rejection cannot be made.
21. Section 12AA, which lays down the procedure for registration, does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit. The language used in the section only requires that activities of the trust or the institution must be genuine, which accordingly would mean, they are in consonance with the objects of the trust/ institution, and are not mere camouflage but are real, pure and sincere, nor against the proposed objects. The profit earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution.
This is more evident if we see the provisions of Section 11, which, while exempting the income given in its various sub-clauses from being included in the total income of the previous year of the person in receipt of the income, for example, in sub-clause (1) says 'income derived from property held under trust wholly for charitable or religious purposes, to the extent to which such income is applied to such purposes in India; and where any such income is accumulated or set apart for application to such purposes in India, to the extent to which the income so accumulated or set apart is not in excess of fifteen per cent of the income from such property.
22. The aforesaid provision thus, clarifies that all that income, which is derived from the property held under the trust wholly for charitable purposes or religious purposes, shall stand exempted to the extent to which such income is applied to such purposes in India but if the income is accumulated or set apart for application to such purposes in India, the same shall not be in excess of fifteen per cent of the income from such property.
23. Sub-section (2) of Section 11 states about a situation where eighty-five per cent of the income referred to in Clause (a) or Clause (b) of Sub-section (1) read with the Explanation to that sub-section is not applied, or is not deemed to have been applied, to charitable or religious purposes in India during the previous year but is accumulated or set apart, either in whole or in part, for application to such purposes in India, and says that in such a situation, such income so accumulated or set apart shall not be included in the total income of the previous year of the person in receipt of the income, provided the conditions given in Sub-clauses (a) and (b) are complied with.
This also means that even that income, which could not be exempted under sub-clause (a) or (b) of Sub-section (1), can still be exempted, if the conditions attached to Sub-section (2) in its Sub-clauses (a) and (b) are complied with.
24. Sub-section (3) again says that if any income referred to in Sub-section (2) is applied to purposes other than charitable or religious purposes as aforesaid or ceases to be accumulated or set apart for application thereto, or ceases to remain invested or deposited in any of the forms or modes specified in Sub-section (5), or is not utilised for the purpose for which it is so accumulated or set apart during the period referred to in Clause (a) of that sub-section or in the year immediately following the expiry thereof, or is credited or paid to any trust or institution registered under Section 12AA or to any fund or institution or trust or institution registered under Section 12AA or to any fund or institution or trust or any university or other educational institution or any hospital or other medical institution referred to in Sub-clause (iv) or Sub-clause (v) or Sub-clause (vi) or Sub-clause (via) of Clause (23C) of Section 10, shall be deemed to be the income of such person of the previous year in which it is so applied or ceases to be accumulated or set apart or ceases to remain so invested or deposited or credited or paid or, as the case may be, of the previous year immediately following the expiry of the period aforesaid.
25. Section 12 also only says that any voluntary contributions received by a trust created wholly for charitable or religious purposes or by an institution established wholly for such purposes, shall for the purposes of Section 11 be deemed to be income derived from property held under trust wholly for charitable or religious purposes and the provisions of that section and Section 13 shall apply accordingly.
The provision thus, emphasizes upon the income of the trust created wholly for charitable or religious purposes or an institution established wholly for such purposes and so is the case in Sub-section (2) of the aforesaid section. The provisions of Section 13 excludes the applicability of Section 11 in certain cases.
26. A cumulative reading of the aforesaid provisions leaves no manner of doubt that exemption under the aforesaid provisions can be claimed with respect to the income derived by the trust or the institution, which is being run for a charitable purpose and, therefore, while considering the registration under Section 12AA, the scope of enquiry of the CIT, would be limited to the aforesaid extent.
27. Since in the absence of such registration, the trust or the institution would not be entitled to claim any exemption of the income derived, though it is being run for charitable purposes, the registration has to be considered in the light of the specific provisions aforesaid and in the manner that it furthers the object of the scheme of registration and, of course, exemption of the entire income or the part of the income, as the case may be, of a charitable trust or institution has to be considered during assessment proceedings.
28. It is significant to mention that registration under Section 12AA, does not necessarily entitle the assessee to get the income excluded from the income of the previous year for the purpose of determination of tax liability but it only entitles the assessee to claim such exemption, which otherwise could not be claimed in the absence of registration. The enquiry by the CIT shall remain restricted to the examination, as to whether the assessee, who has moved the application for registration under Section 12A, is actually in the activities which are genuine. Genuineness of the activities of the trust or the institution has to be seen, keeping in mind the objects thereof, which necessarily means that the CIT shall satisfy himself about the fact that the activities are genuine and in consonance with the objects of the trust or the institution. In other words, if establishing and running a school is the object of the society, as given in its bye-laws, it has to be satisfied that the society has established the school, where education is being imparted as per rules and the factum of establishment and running school is a genuine activity. The enquiry regarding genuineness of the activities cannot be stretched beyond this.
29. Sufficient safeguards having been given in Sections 11, 12 and 13 for assessing the income which has not been applied to the purpose of the trust or the institution, the intention of the law maker and the scope and purport of the provision is apparent while considering the question of registration.
30. The objects of the present society, which have been reproduced in the order of the Tribunal, are being reproduced hereunder:
1. Baalakon ka maansik, samajik, charitrik tatha naitik vikas karna.
2. Poorv Prathmik, Junior High School, High School, Intermediate va Degree star tak ki Shiksha ki vyavastha karna, jaisa ki samay-samay par shasan dwara uchit samjha jaega.
3. Samajik drishti se anaath, nirashrit, Harijan, pichhdijaati aur apang baalakon ke sanrakshan va punarvas ki vyavastha karna.
4. Baalakon ke sharirik vikas hetu vyayam, khelkood aadi ki vyavastha karna.
5. Baalakon ke maansik vikas hetu pustakalaya aur vachnalaya ki sthapna karna.
6. Uprokt uddeshyon ki poorti hetu evam inse sambandhit anya aavashyak karya jo Societies Act ki dhara 20 ke antargat honge evam any aakasmik karyon ke liye prabandh karna.
31. The Tribunal has rightly found that the objects aforesaid show that none of the objects were against public policy and the main activity of the said society was to provide education to children from Primary section to Degree level and to improve the mental, social and other development of the students.
32. A provision has also been made with respect to underprivileged children providing for their protection and rehabilitation and also physical development through exercise and sports, besides providing library and reading room for the development of the students. The objects, therefore, cannot be said to be the objects, which run against public policy or do not fall within the category of activities, which are for charitable purposes. Education in itself is a charitable purpose and activities related thereto, which include, both physical and mental development and also instilling of a feeling of self-confidence through exercise, sports and extensive reading of good books, cannot, in any manner, be described as a non-charitable purpose or much less a non-educational activity. Education means and includes not only knowledge of text books or prescribed educational courses but overall development of the child, which includes personality development and his physical fitness, apart from his capacity to analyse things and reach to logical conclusion on a given issue. Schools may, for the purpose, organize various cultural and educational entertainment programmes, sports meet, debates and seminars etc. and all such activities shall form part of the education.
33. We thus find that the objects of the society were well in consonance with the scheme of the Act.
34. In regard to the genuineness of the activities, the CIT has given very many reasons, which have been though discussed by the Tribunal but we would also like to put on record in a summarized manner.
35. Based on the conclusion of the ITO that object No. 6 referred to above, gives unbridled power to spent money in the garb of emergent work, which may result into misappropriation of funds etc., the CIT has refused registration, for which suffice would be to mention that the aforesaid object, when read as a whole, lays down clear guidelines, under which the management can exercise power for emergent works, namely, all such work would only be related or relatable to one or the other objects, referred to in object Nos. 1 to 5. In case any ancillary or related work is to be performed for achieving either of the aforesaid objects, for which an emergent work is to be carried out, the management can do so, but if such a work is not relatable to any of the aforesaid objects, the management would have no power to take recourse to aforesaid clauses. That being so, the view expressed by the ITO as well as by the CIT runs contrary to the aforesaid objects, and that too without any basis, as no such instance has been quoted nor found where management has usurped and misused its power.
36. The purchase of books worth Rs. 1 lakh in the name of Nav Chetna Kendra has been found to be shady, firstly because these books were of a very high standard, not meant for the students upto XII class and secondly they were purchased in the name of Nav Chetna Kendra which, is a separate society.
The Tribunal has rightly found that Nav Chetna Kendra is a society, which has been formed for maintaining the library for the benefit of the students, being run by the assessee society and if the books of high standard have been purchased, it cannot be presumed that no purchase was made nor it is the case of the Revenue that books worth the amount were not purchased or the payments were not made. It has also not been disputed by the Revenue that Nav Chetna Kendra, a society which has been formed only for running the library for the institution, is not running the library.
The plea of the Revenue that some funds have been given to Nav Chetna Kendra, which casts doubt about the genuineness of the activities of the assessee institution, is also of no substance, as admittedly the object of the Nav Chetna Kendra society, is not against any public policy and it has also been brought on record that the amount advanced by the assessee to the Nav Chetna Kendra was not for any other object, except that mentioned in the objects of that society. There is nothing on record to show that money so advanced was for personal benefit of any office bearers of the assessee Society or any other person. It not being in dispute that Nav Chetna Kendra Society runs the library of the institution, an object related to charitable purpose, where the money has been advanced by the assessee society in furtherance of the said object i.e. for running a library, which is again an educational purpose, it cannot be a ground for refusing registration of the assessee society.
There is no finding that the aforesaid activities of the society were not genuine.
37. The Tribunal has also considered that the balance sheet could not be reconciled as earlier the balance sheet was not audited and the audited balance sheets, which were filed before the CIT, did not show any discrepancy.
38. So far the non-deduction of provident fund from the salary paid to certain employees is concerned, that in itself again would not constitute a ground for rejection, as no such requirement stands spelt out from provisions of Section 12AA nor it makes the activities of the institution as non-genuine. In case the institution has defaulted or defaults in the matter of depositing, contributions of the employees' provident fund, the Act concerned shall take care of such default but in no case it can be a ground for refusal of registration.
39. The following facts, which are of real importance and which cannot be overlooked are; that the assessee society was established and got registered in 1981-82. Initially the assessee started running a school upto Class VIII with 60 students in residential house at C-212, Rajajipuram, Lucknow and then U.P. Avas Vikas Parishad allotted a piece of land of 1,880 sq. mtrs. in asst. yr. 1986. After construction being raised on that plot, the school was shifted in this building in the year 1987. The strength of the students from 60 students raised upto 1,500 and later on, assessee society obtained affiliation from CBSE, Delhi Board in the year 1993 upto Class X and subsequently upto Class XII in the year 1997 in various disciplines viz., Science, Commerce, Arts, Computer, Music, Entrepreneurship and Information Technology in both the English and Hindi medium upto Class XII. The assessee society passed a resolution in the meeting held on 1st Dec, 1998, copy of which was before the Tribunal, in which it was mentioned that a library in the name of "Nav Jagriti Kendra" be established for providing books to the school children. In this context, the assessee society passed another resolution on 10th Aug., 1999 providing monetary help to Nav Chetna Kendra for purchase of books by the assessee society and in that context the books of higher studies were purchased and made available for students to inculcate knowledge. Such expenses, in purchase of books of higher standard, are not involving any monetary profit to assessee society or its office bearers. The society was running two branches of its schools, one at Rajajipuram and the other at Gomti Nagar, whereas the third branch was in the making at Vishnulok Colony, Kanpur Road, Lucknow.
40. So far the charge of fee is concerned, it was on record that the fee was being charged, which was prevailing in other schools and tuition fee etc. ranged from Rs. 225 to Rs. 700, excluding conveyance allowance, which cannot be said to be arbitrary and excessive.
41. The objects of the assessee society undoubtedly are for charitable purposes and not against public policy. The genuineness of its activities is proved by the aforesaid facts, which conclusively show that the society has established a school for the children in the year 1982 and thereafter it has opened its two more branches raising the standard of the school upto CBSE, Delhi Board and subsequently upto Class XII, with a large number of students and sufficient staff to whom salary is being paid.
42. The activities aforesaid cannot be doubted nor can be said to be non-genuine within the meaning of the provisions of Section 12AA.
43. The scheme of Section 12A and Section 12AA does not allow any person/trust or institution to take benefit of the provisions of Section 11, Section 12, as the case may be, unless registration under Section 12AA is obtained and that Sub-clause (3) of Section 12AA puts complete control over the activities of the trust or the institution and if it is found at any subsequent stage, that its activities are not being carried as per the objects or they do not remain genuine, action for cancellation of registration can be taken.
44. For the reasons stated above, we do-not find any illegality or infirmity in the order passed by the Tribunal.
The appeal has no force, which is hereby dismissed.